Filtered by Topic: Monetary Policy Use setting Monetary Policy
Housing rebound continues unabated Australia’s house-price rebound went full steam ahead in July. At the margin, that should strengthen the case for the RBA to lift its cash rate by a further 25bp at its meeting later today. Nonetheless, with resurgent …
1st August 2023
Australia’s house-price rebound showed no signs of slowing in June. However, with the RBA set to swing its rate hammer a few more times, we’re sticking with our view that the upturn will prove fleeting. House prices rose by 1.1% m/m in seasonally-adjusted …
3rd July 2023
Recession will drive RBNZ to cut rates by Q4 The contraction in Q1 GDP means that a recession is now well under way in New Zealand. Accordingly, we’re sticking with our forecast that the RBNZ will shift gears and start cutting rates before year-end. The …
15th June 2023
RBA could be forced to keep hiking into economic downturn Real GDP growth slowed sharply last quarter as household spending ground to a standstill. However, with productivity falling for a fourth consecutive quarter, unit labour costs grew apace. …
7th June 2023
Good news on inflation but core rate still high The fall in German headline inflation in May and signs that core price pressures eased echo the message from the inflation figures for France and Spain and supports the case for the ECB to limit further …
31st May 2023
BoE will need to work harder to conquer inflation Note: We’ll be discussing the UK April CPI report in a briefing at 10:00 BST/17:00 SGT on 24 th May. Register here. The Bank of England won’t be able to ignore the smaller-than-expected fall in CPI …
24th May 2023
Copom to stay hawkish despite inflation decline The sharp fall in Brazilian inflation, to 4.2% y/y last month, was encouragingly broad based among the sub-categories of the CPI basket. But we think the central bank will want to see more evidence that core …
12th May 2023
Inflation drops, but 25bp hike next week still more likely than not The drop in Mexico’s headline inflation rate, to 6.3% y/y in April, was broad-based and will provide some comfort to officials at the central bank that price pressures are finally easing. …
9th May 2023
Labour market continues to run red hot New Zealand’s labour market remained extremely tight last quarter, presenting upside risks to our forecast for a 25bp rate hike later this month. The 0.8% q/q rise in employment was stronger than most had …
3rd May 2023
RBA will deliver a final 25bp rate hike next week While inflation is moderating slightly faster than the RBA had anticipated, price gains remain far too strong to be consistent with the Bank’s 2-3% inflation target and we’re sticking to our forecast of a …
26th April 2023
Fall in inflation unlikely to be enough to prevent a final 25bp rate hike The fall in Mexico’s headline inflation rate to an 18-month low of 6.2%y/y in the first half of April was broad-based and will provide some comfort to officials at Banxico that …
24th April 2023
Inflation is coming off the boil Although inflation in Q1 was below what the RBNZ had expected, we don’t expect the Bank to take its foot off the brakes just yet. Indeed, with non-tradables prices continuing to rise at a rapid clip, the RBNZ is likely to …
20th April 2023
Latest pick-up in inflation strengthens hawks’ case South Africa’s headline inflation reading for March came in stronger than expected, at 7.1% y/y, and core inflation remains uncomfortably high for policymakers at the Reserve Bank. With persistent …
19th April 2023
Rise in core inflation makes 25bp hike in May very likely March’s inflation data make it all but certain that the Norges Bank will press on with its planned 25bp rate hike at the next meeting in May. The increase in headline CPI inflation from 6.3% in …
11th April 2023
There was plenty to be encouraged by in the Bank of Canada’s business and consumer surveys, with firms’ sales expectations holding up even as labour and other capacity pressures eased considerably. Wage expectations remain elevated, but the easing of …
3rd April 2023
Note: Join our 6th April online briefing all about the risks to EMs from banking turmoil. Register now . Strength of manufacturing PMI supports rate hike this week India’s manufacturing PMI reading edged up in March and points to healthy growth in the …
Headline inflation tumbling, core peaking The big falls in headline inflation in Germany and Spain should provide some relief for struggling households in the coming months. And core inflation in Germany may now have passed its peak. However, with …
30th March 2023
Softness in retail sales raises risk of RBA pause The tepid rise in retail sales in February all but locks in a contraction in sales volumes in Q1. We think that a stronger rise in services spending will help keep private consumption buoyant this quarter. …
28th March 2023
Jump in core inflation seals the deal on a 25bp hike next week The rise in South Africa’s headline inflation rate, to 7.0% y/y, in February may be a sign that the intensification of loadshedding in recent months is fuelling price pressures. So long as …
22nd March 2023
Reacceleration in inflation supports the case for another rate hike The reacceleration in CPI inflation in February may be enough to tilt the Bank of England towards raising interest rates from 4.00% to 4.25% tomorrow despite the recent turmoil in the …
Economy is tipping into recession With the New Zealand economy in for more pain on the heels of the Q4 GDP decline, we expect the RBNZ to start cutting rates towards the end of the year. The -0.6% q/q drop in production GDP was weaker than most had …
15th March 2023
SA economy in less dire straits; Inflation in Nigeria at new 17-year high January’s hard activity figures out of South Africa came in stronger than expected, reducing the chances of a technical recession. But momentum remains extremely weak. Elsewhere, …
Strong inflation data counter financial stability concerns The 0.5% m/m rise in core consumer prices last month adds to the evidence that inflation remains stubbornly high, but the ongoing fallout from the SVB crisis over the coming days is still likely …
14th March 2023
Credit growth benefiting from reopening boost Bank loan growth jumped to a 14-month high in February. And broad credit growth accelerated for the first time since September. This rebound should continue in the near-term thanks to a reopening revival in …
10th March 2023
Lower inflation means Norges Bank can stick to 25bp hikes February’s decline in headline and core inflation takes some of the pressure off the Norges Bank and means that it is likely to hike by 25bp at the meeting in two weeks’ time. After surprising on …
Inflation edges down, but still a bit more tightening in the pipeline Mexico’s headline inflation rated edged down to 7.6% y/y in February but the further pick-up in services inflation will continue to worry policymakers at Banxico. We think that the …
9th March 2023
Strength of core inflation means ECB has a long way to go February’s increase in core inflation will reinforce ECB policymakers’ conviction that significant rate increases are needed. For some time we have been forecasting a 50bp hike at the meeting in …
2nd March 2023
Slowdown in inflation won’t prevent RBA from lifting rates to 4.1% GDP growth softened last quarter and inflation slowed sharply in January. But with inflation still very high, that won’t prevent the RBA from hiking the cash rate to a peak of 4.1% in May …
1st March 2023
Further rise in services inflation will keep Banxico in hawkish mood Mexico’s headline inflation rate edged down to 7.8% y/y in the first half of February but the further pick-up in services inflation will continue to concern policymakers at Banxico. We …
23rd February 2023
Moderating services inflation makes Bank of England’s life easier The fall in CPI inflation from 10.5% in December to 10.1% in January (consensus and CE forecast: 10.2%, BoE forecast: 10.1%), the drop in the core rate from 6.3% to 5.8% and the easing in …
15th February 2023
Easing price pressures to make way to final rate hike Inflation in South Africa continued to decline, to 6.9% y/y in January, but we think that the Reserve Bank will err on the side of delivering a final 25bp rate hike to (7.50%) at the next policy …
Wage growth continues to accelerate despite cooling labour demand December’s labour market data showed that, despite an easing in labour demand, labour market conditions stayed tight and the market continued to support strong wage growth. The Bank of …
14th February 2023
Rise in Mexican inflation paves the way for 25bp rate hike later today Mexico’s headline inflation rate edged up to 7.9% y/y in January, setting the scene for Banxico to raise interest rates by 25bp, to 10.75%, later today. We think that this will mark …
9th February 2023
Headline inflation to fall sharply, but core rate will be sticky January’s drop in headline inflation should be taken with a pinch of salt because a “data processing problem” meant that the data for Germany had to be estimated and might therefore be …
1st February 2023
Drag from higher interest rates intensified in December December’s money and credit figures revealed that higher interest rates further dampened economic activity at the end of last year. Moreover, the drag on activity will continue to intensify this …
31st January 2023
Recession likely in first half of this year The small increase in euro-zone GDP in Q4 was better than we feared a few months ago but the economy excluding Ireland still flat-lined. As the data deteriorated towards the end of the quarter and tighter …
End of monetary tightening not far away as inflation falls Inflation in South Africa came in softer than expected, at 7.2% y/y, in December, and with core inflation ticking down as well, we think that a slowdown in the tightening cycle is nailed on. We …
18th January 2023
Wage and price inflation expectations still too strong for comfort The Bank of Canada’s latest quarterly surveys leave no doubt that higher interest rates are weighing on demand, but still don’t show a convincing moderation in wage and inflation …
16th January 2023
Another more muted gain in core CPI Core CPI inflation was still an elevated 5.7% in December but, with another more muted 0.3% m/m gain, the three-month annualised rate fell to a 20-month low of 3.1%. Admittedly, the latter is still slightly above the …
12th January 2023
Strong core inflation to prompt one final Norges Bank hike The continued strength of core inflation will encourage the Norges Bank to press on with another 25bp interest rate increase next week. While there is still some more upside risk to underlying …
10th January 2023
Higher interest rates continue to weigh on the economy November’s money and credit figures showed further signs that higher interest rates are dampening activity, particularly in the housing market. This will be a constant theme over the year ahead, …
4th January 2023
Fall in headline rate but core rate rises Headline inflation in Switzerland fell in December but the rise in the core rate will be a concern for SNB policymakers. We still think that the Bank will raise rates by just 25bp in March, compared to the 50bp …
Unabating price pressures to put policymakers in a bind November inflation data out of Nigeria came in stronger than expected, with the headline rate picking up to 21.5% y/y and price pressures increasing in m/m terms as well. Together with our …
15th December 2022
Stick a fork in it, inflation is done The Fed will still hike its policy rate by 50bp tomorrow and the new projections could show the peak in rates above 5%, but the 0.2% m/m increase in core consumer prices in November provides strong support to our …
13th December 2022
Stable inflation keeps pressure off SNB The low inflation rate in November supports our view that the Swiss National Bank will not need to raise interest rates much further in the current cycle. Indeed, there is a growing chance that policymakers raise …
1st December 2022
Economy holds up in Q3, but higher rates now taking a toll While base effects caused a sharp slowdown in headline GDP growth in India in Q3 (Q2 of FY22/23), growth held up well in quarter-on-quarter terms. However, there are signs in more timely activity …
30th November 2022
Peak headline inflation won’t stop ECB hiking Euro-zone inflation may now be past its peak but with the core measure unchanged in November and set to remain well above 2% next year, we expect the ECB to hike rates by 50bp or 75bp in December. The fall …
The Bank of Thailand hiked interest rates today by a further 25bps (to 1.25%), and reiterated that it is likely to continue tightening policy gradually over the coming months. The decision was correctly predicted by 17 out of the 19 analysts polled by …
Headline inflation close to a peak, but core may rise further November’s fall in headline inflation in Germany and Spain suggest that the euro-zone headline rate will come in lower than we had anticipated when it is published tomorrow, and is now close …
29th November 2022
Higher interest rates beginning to influence the economy October’s money and credit figures highlight how higher interest rates are starting to influence the economy. Higher interest rates are weakening the demand for credit, especially for mortgages, …
